Supply Chains and Omnichannel Marketing

Supply chains worldwide are not generally optimised for omnichannel marketing

A recent study from PricewaterhouseCoopers, one of the Big Four auditors, recently released a survey of retail supply chains and omnichannelexecutives, and the results have a lot to tell us. In short, big retail is not prepared to take advantage of omnichannel marketing, and doesn’t plan to do much about it.

The study polled several hundred executives representing retail companies from all around the world. Taken as a whole, only 17% of those polled felt that their supply chains were optimised for omnichannel marketing, even though fully half believed their supply chain management gave them an important competitive advantage.

The results were not evenly distributed. Taking only the most successful half of the companies into account changes those figures, but even then only 1/3 feel that their supply chain is set up to take real advantage of omnichannel marketing. Furthermore, only 1/3 of those polled felt that those firms that do use omnichannel marketing concepts heavily to represent a substantial threat.

The consequences of ignoring omnichannel marketing

Omnichannel marketing concepts are seen by many as a game changing strategy. Comp store sales figures are no longer the most important metric for the retail sector, and continuing to focus on them could leave you vulnerable to those who understand the new dynamic.

As innovative retailers pursue growth by entering markets farther afield, supply chain management becomes much more complicated and expensive. Some retailers seem to be focusing on a broad reach at the expense of providing the kind of service modern customers demand. Many analysts question whether a retailer that cannot take advantage of multichannel techniques domestically can muster the flexibility and resilience required to win customers abroad.

Many UK retailers have unrealistic expectations about expanding into world markets. They can’t optimise for supplying foreign markets if they will be competing there with retailers who have already taken the omnichannel marketing concept to heart. In PwC’s study, fully 2/3 failed to recognise this challenge. Because they have underinvested in this vital aspect of their supply chains, they can be expected to struggle in these markets, if they ever establish themselves there at all.

The benefits of omnichannel marketing investment

By comparison, those companies polled who have taken the development of their supply chains seriously in terms of omnichannel marketing have on average 15% lower actual supply chain costs than those who responded otherwise. They have something like ½ the inventory levels of the ‘no’ camp, and an average cash to cash cycle only 33% as long. They also had greater confidence in their future growth, apparently with good reason.

Successful retailers have changed their views on their supply chain lately. Not solely due to Omnichannel marketing to be sure, but it is a large factor. The demands of customers for rapid response, improved service and alternate retail channels are factors customers already use to differentiate between retailers. If retailer A spends many thousands of pounds advertising a product but doesn’t offer direct sales from their website or cannot promise delivery in less than a week, retailer B who does offer these omnichannel services will get the sale off A’s hard work.

So much depends on your brand and reputation. If you have a reputation as an excellent brink-and-mortar retailer with poor web support, customers will only ever think of you if they are in the mood to physically go to your shop. If they want to buy online, they will search Amazon first, or your competitor across town. They might find your web page by accident on Google, but they might not even use a search engine. The differentiation is even stronger for mobile web sales. If a customer has your competition’s app installed, you won’t even get a look in.

The long and the short of it is that before you can think of expansion, you need to make sure you can supply your markets the way they demand to be supplied. The best way to do that is to incorporate these onmichannel marketing techniques into your supply chain.

 


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